Raiffeisen Bank International—the biggest Western bank continuing operations in Russia—has halted efforts to offload its affiliate due to improved ties between Washington and Moscow, according to Financial Times.
Following Russia’s comprehensive invasion of Ukraine in 2022, Raiffeisen faced significant pressure from regulators and foreign administrations such as those within the European Union and the United States, compelling them to consider divesting their operations in Russia.
However, in February, the RBI decided to momentarily stop the sale as Moscow and Washington started to reinstate political dialogue, said two individuals aware of the negotiation process.
A source indicated that the suspension was due to worldwide instability and shifts in the dynamics between the US and Russia. They explained, “It’s essential to evaluate the circumstances and determine if the stance of the U.S. could shift.”
A third party mentioned that for the time being, substantial efforts to make a sale have been temporarily halted, though the internal circumstances might shift once more. They declined to comment on whether this suspension resulted from geopolitical occurrences or legal proceedings.
Improving ties between Washington and Moscow
The pause in the sale process occurred against the backdrop of the US – which had warned the Austrian bank about the risk of restricted access to the American financial system due to its ties to Russia – showing serious interest in restoring economic cooperation with Moscow.
Steve Witkoff, who serves as Trump’s Special Envoy, mentioned that the US and Russia are exploring “highly appealing business prospects” following his meeting with Putin last week, which was their third encounter within twelve months.
Legal proceedings
Last year, the European Central Bank instructed RBI and other European banks continuing operations in Russia to accelerate their attempts at decreasing business activities within the nation if selling out was not an option for them.
The RBI attempted to reduce loan activities in Russia and halt the addition of new customers, yet it retained a more significant presence there compared to its rivals.
The convoluted sales process grew even more challenging in September 2024 after a Russian court froze the shares belonging to Raiffeisen Bank’s Russian branch. In January, the same court ruled that the bank must pay €2 billion in compensation. As per RBI at that juncture, these legal actions barred them from moving any share ownership within their Russian entity.
In its statement, RBI reported that the sale process is “ongoing,” but added that the court case has halted the execution of any deal.
Nevertheless, the legal proceedings have impacted its profitability. In the final quarter of 2024, RBI reported a net deficit of $926 million — marking their initial quarterly net loss over the last nine years — primarily because of substantial write-downs following the Russian court’s ruling.
